It can hold fluids. It has been introduced as a Barrel of Nearly-Limitless Ale, before.

If you try storing the atmosphere/ocean(s) a deity might frown upon such an act.

It functions as a Titan Space (side dimension only as big as it needs to be), so yes.

An older version had it EXPEL everything inside if you broke the single item rule, but that was nerfed due to being OP as hell. Fill your barrel with near infinite daggers. Toss in a marble and convert whatever is in front of the barrel to free-floating-carbon

Singularity Barrel: Can hold an infinite amount of one type of item. You want it to hold scimitars? Sure, it’ll hold as many as you could ever want. You try to put one dagger in there? You gotta dump out all the scimitars.